| At present,the reform of SOEs has entered a critical period,and the incentive mechanism of executive compensation is the key and difficult problem in the reform of SOEs(Wang Dongjing,2019).The key point is that the executive compensation incentive mechanism is the core content of modern corporate governance(Jensen and Murphy,1990;Li Wei'an,et al.,2010).General Secretary Xi pointed out that the key to achieving sustainable speed,quality and efficiency is driven by innovation and talents,and talents are the foundation of innovation,and innovation-driven is essentially talent-driven.Senior executives,as an important talent resource,play a vital role in the operation and management of enterprises.Exploring an effective incentive system is crucial to the reform of SOEs.The difficulty lies in the fact that SOEs have "ownership absence",senior management "semi-market and semiadministrative" governance,and strong "inside control" and other institutional defects(Lu Rui et al.,2011).In this context,how to design the incentive mechanism of corporate executive compensation to ensure the effort of the executives while maintaining social equity is a difficult problem.For a long time,SOE executive compensation has been strictly controlled.As early as more than 20 years ago,the government had capped the salaries of SOE executives,clearly stipulating that the maximum annual salary of SOE managers should not exceed 5 times the average annual salary of employees.However,there are many ways for senior executives to increase their salaries,so the effect of salary control is limited(Wang Dongjing,2019).In 2008,executives of Guotai Junan Securities and Ping An Insurance were exposed to sky-high salaries.Against the background that all walks of life have criticized the high salaries of SOE managers,the government has issued the "Guiding Opinions on Further Regulating the Salary Management of the Heads of Central Enterprises"(2009)and the "Reform Plan for the Salary System of the Heads of Centrally Managed Enterprises"(2014)out of concerns about social equity,respectively called the first "salary limit order" and the second "salary limit order".The two "salary limit orders" focused on executives appointed by the central enterprises(other SOEs refer to the implementation),and restricted the basic annual salary,performance annual salary and tenure incentives of managers to several times the average salary of on-the-job employees.The purpose of the policy is to improving the salary formation mechanism and adjusts the internal salary gap.The salary limit order imposes a one-size-fits-all control on SOE executives.It is true that in the context of the chaos in the remuneration of SOE executives,it is understandable to control the remuneration of SOE executives.However,under the “one size fits all” salary limit policy,the salaries of SOE executives have shown another unreasonable phenomenon.The salary of executives has been reduced due to the salary limit policy when corporate performance increased.A typical case is Guizhou Moutai(see Figure 3-1 in Chapter 3).Guizhou Moutai's net profit showed an upward trend during the period 2005-2017,but the salary of its chairman did not increase year by year,showed a roller coaster rise and decline with the promulgate of two salary restrictions,with peaks in 2009 and 2014.Due to the existence of the "salary limit order",some SOEs have experienced an unreasonable phenomenon that the salary of senior executives does not rise but falls when their performance increases.Contrary to salary stickiness(the increase in executive compensation when corporate performance increases is greater than the decrease in executive compensation when corporate performance declines),at this time,executive compensation is not sensitive to corporate performance increases,which we call the phenomenon of "Anti-Compensation Stickiness".For a long time,well-designed executive compensation contracts have been regarded as one of the main mechanisms for achieving the compatibility of manager goals and shareholder goals(Jensen and Meckling,1976;Jensen and Murphy,1990).Executive compensation and performance-linked compensation will encourage managers to maximize personal compensation while maximizing corporate performance and shareholder wealth.It is considered an effective compensation contract(Jensen and Murphy,1990;Leone,Wu and Zimmerman,2006;Jackson,Lopez and Reitenga,2008).The phenomenon of anti-salary stickiness in which executive compensation does not increase but decreases with performance growth distorts the effectiveness of the compensation contract,resulting in insufficient incentives for executives.Contract theory believes that in the absence of risk sharing and joint investment,the lower the incentives the agent obtains from the contract,the less work effort and incentives will be(Holmstrom,1979,1982;Bolton and Dewatripont,2005).Insufficient incentives may lead executives to conduct behaviors that damage the value of the company for personal gain,causing more serious principal-agent problems(Wen Bingzhou and Yu Qingsong,2006).In the long run,the lack of executive incentives is the lack of corporate governance mechanisms.The mixed ownership reform attempts to introduce non-state capital to participate in corporate governance,in order to improve the governance level of SOEs and improve the governance mechanism.After the introduction of non-stateowned shareholders,foreign capital or private economic entities have obtained certain equity in SOEs.In order to protect their own interests from damage,they will have the motivation to improve the manager's incentive and restraint mechanism,so as to reduce the self-serving behavior of managers and guarantee their efforts(Megginson and Netter,2001;Gupta,2005;Cai Guilong et al.,2018b).In this context,can the non-state shareholders to participate in governance in SOEs reduce the phenomenon of anti-salary stickiness?Based on the above background,this article constructs the "anti-salary stickiness" indicator to intuitively measure the unreasonable phenomenon of the executive compensation contract under the "salary limit order".Specifically,when the salary growth rate divided by the performance growth rate is negative(excluding the performance growth rate is negative),we define it as the phenomenon of antisalary stickiness,which means that the salary of the executives does not rise but declines under the condition of performance growth.This article has conducted a comprehensive and in-depth discussion on the phenomenon of anti-salary stickiness among SOE executives,mainly from the source of this phenomenon(the implementation of the "salary limit order"),the resulting adverse consequences(increased corporate violations)and the governance effect of this phenomenon(Governance of Non-State-owned Shareholders)three aspects of progressive research.It mainly answers the following questions: Has the "salary limit order" caused an increase in the phenomenon of executives' anti-salary stickiness? Does the phenomenon of anti-salary stickiness cause adverse consequences such as damage to company performance and increased corporate violations? Can the introduction of non-state capital to participate in governance in the mixed ownership reform improve the phenomenon of anti-salary stickiness? What is the difference between monopolistic SOEs and competitive SOEs? The main research conclusions are:First,the “salary limit order” will lead to an increase in the phenomenon of anti-salary stickiness among SOE executives.Specifically,based on the background of the two “salary limit orders”,this article constructs an anti-salary stickiness index and finds that “salary limit orders” will lead to an increase in the anti-salary stickiness phenomenon of SOE executives;in addition,this kind of anti-salary stickiness phenomenon will reduce the future performance of competitive SOEs,but has no significant effect on monopolistic SOEs.Further research found that in the implementation of the “salary limit order”,this phenomenon of anti-salary stickiness is more reflected in SOEs with strong government control(short pyramid levels and political connections among senior managers)and weak management power.Second,the phenomenon of anti-salary stickiness among SOE executives will lead to an increase in the probability of corporate violations.Specifically,the antisalary stickiness phenomenon of SOE executives will be positively correlated with the probability of corporate violations.This increase of violations is mainly reflected in competitive SOEs,and the impact on monopolistic SOEs is not obvious.From the perspective of violation types,the degree of violations caused by anti-salary stickiness is mainly serious violations,which are not significant to general violations;the types of violations are mainly violations for personal gain,and violations of information disclosure are not significant.Further analysis found that under the weak of company's internal supervision and governance environment(lower internal control quality,higher management power)and the weak external supervision and governance(non-big-four audits,non-cross-listing,less analyst attention,lower degree of marketization),the impact of anti-salary stickiness on the company's violations is more significant,indicating that the supervisory and governance mechanism has suppressed the private interests of the executives.Finally,the participation of non-state-owned shareholders in governance can improve the anti-stickiness phenomenon of SOE executives.Specifically,the participation of non-state-owned shareholders in governance is negatively related to the phenomenon of SOE executives' anti-stickiness.Compared with the impact of holding shares,non-state-owned shareholders can significantly improve the irrational compensation of company executives when they have the power of the board of directors.In addition,the governance role of non-state-owned shareholders is more significant in competitive SOEs,but not obvious in monopolistic SOEs.From the perspective of marketization,the governance of non-state-owned shareholders is more effective in regions with lower marketization.Further,we found that the governance of non-state shareholders can improve the adverse consequences caused by the phenomenon of anti-salary stickiness,similar to the supervision mechanism,which will reduce the negative impact of anti-salary stickiness on the future performance of SOEs and the impact on violations.Compared with the existing literature,the contributions of this article are mainly reflected in the following aspects:First,this article expands and enriches the relevant research on the irrational phenomenon of executive compensation.Existing research mainly focuses on the excess salary of executives(Coakley et al.,2006;Wu Yuhui and Wu Shinong,2010;Fang Junxiong,2012;Luo Hong et al.,2014;Cheng Xinsheng et al.,2015),lucky pay(Bertrand and Mullainathan,2001;Shen Yifeng and Li Peigong,2010;Yan Weibo and Deng Xiaolan,2018),low salary performance sensitivity(Firth et.al.,2006;Du Xingqiang and Wang Lihua,2007;Xin Qingquan and Tan Weiqiang,2009)and the existence of compensation stickiness(Garvey and Milbourn,2006;Jackson et al.,2008;Fang Junxiong,2009,2011;Bu Danlu and Wen Caihong,2013;Lei Yu and Guo Jianhua,2017).Thoes irrational phenomenon of executive compensation all from the angle of executives grabbing remuneration for personal gain has caused unreasonable remuneration for shareholders.However,in the context of the remuneration control of SOEs,unreasonable remuneration for senior executives also appeared.At this time,corporate performance increased while executive remuneration fell.Based on this,this article proposes for the first time the phenomenon of anti-salary stickiness under the background of the "salary limit order",and constructs corresponding indicators for empirical testing,and expands the relevant research on salary irrationality from the perspective of insufficient executive incentives.Second,this article enriches and expands the literature on the economic consequences of mixed ownership reforms.Existing studies generally prove that the introduction of non-state shareholders to participate in corporate governance in mixed ownership reform has a positive effect,such as improving the internal control quality of SOEs,improving the quality of accounting information,and improving innovation efficiency(Liu Yunguo et al.,2016;Li Wengui and Yu Minggui,2015;Zeng Shiyun et al.,2017),and ultimately improve the performance of SOEs(Liu Xiaoxuan,2004;Ma Lianfu et al.,2015;Hao Yang and Gong Liutang,2017).Although the existing literature on mixed ownership reform is very rich,there are still few documents on the governance of non-state-owned shareholders affecting executive compensation contracts.Only Cai Guilong et al.(2018)found that the governance of non-state-owned shareholders is sensitive to the performance of executive compensation in SOEs.Based on the phenomenon of “anti-salary stickiness” in SOEs,this article explores the effect of non-state shareholder governance on the improvement of insufficient incentive compensation contracts,enriches and expands the relevant literature on the impact of non-state shareholder governance on executive compensation incentives,and also enriches research on economic consequences of the reform of mixed ownership.Third,this article expands and enriches the relevant research on SOE compensation regulation.First,although the existing literature on the measurement of salary control is relatively rich(Chen Donghua et al.,2005;Fang Junxiong,2009;Chen Xinyuan et al.2009;Xu Xixiong and Liu Xing,2013),most of the literature uses the internal salary gap to measure salary control.The literature on the "salary limit order" mainly discusses whether the "salary limit order" achieves the effect of salary limit(Shen Yifeng and Li Peigong,2010;Tian Ni and Zhang Zongyi,2015;Yang Qing et al.,2018).This paper proposes the phenomenon of anti-salary stickiness in SOEs based on the "salary limit order",and designs indicators to directly measure the degree of salary control,thereby enriching the relevant literature of salary regulation.Second,from the economic consequences of salary control,the existing literature finds that salary control may cause more on-the-job consumption by senior executives(Chen Donghua et al.,2005)and corruption(Chen Xinyuan et al.,2009;Xu Xixiong and Liu Xing,2013).Behaviors may also undermine the enthusiasm of executives to work,thereby affecting corporate innovation(Yan Weibo and Deng Xiaolan,2018),total factor productivity(Huang Xianhuan and Wang Yao,2020),etc.This article provides evidence from the perspective of corporate violations.The phenomenon of management anti-salary stickiness has caused more violations in companies,which has expanded the relevant literature on the economic consequences of salary control.Fourth,this article expands and enriches the relevant research on the classified governance of SOEs.The reform of the classification of SOEs is the focus of the reform of SOEs.However,the research on the classification reform of SOEs is mainly based on theoretical research and status description(Huang Qunhui and Yu Jing,2013;Yang Ruilong,2013;Gao Minghua et al.,2014;Wei Minghai et al.,2017),a few empirical studies such as Xu Wei et al.(2018)From the perspective of classified governance,it examines the relationship between the controlling party governance mechanism and corporate innovation dividends.Yang Qing et al.(2018)found that the “salary limit order” has different impact effects on competition and monopolistic central enterprises.This article finds that the phenomenon of executive anti-salary stickiness will lead to a decrease in the future performance of competitive SOEs and an increase in the probability of violations,but the impact on monopolistic SOEs is not significant,which expands and enriches the literature on classified governance of SOEs.The research in this article has the following practical significance:First,the reform of SOEs has always been the central link of China's economic system reform.At present,the reform of SOEs has entered a critical period,and the executive compensation incentive mechanism is the key and difficult problem in the reform of SOEs(Wang Dongjing,2019).From the perspective of the reform of the SOE's salary system,a unified idea has not been reached,and SOEs still have unreasonable phenomena such as unfair distribution and insufficient salary incentives.Under the background of comprehensively deepening the reform,the discussion of the SOE's salary system is of great significance.Second,the mixed ownership reform plays an important role in giving play to the strategic supporting role of the state-owned economy and achieving high-quality development of the national economy.It also has strategic significance that cannot be ignored in building a modern and powerful socialist country in an all-round way(He Ying and Yang Lin,2021).At present,the reform of mixed ownership has moved from "mixed" capital and "mixed" property rights to the stage of "reform" mechanism.Aims to promote the construction of multi-dimensional mechanism through the mixing of property rights,and finally gain in the construction of governance mechanism,operation mechanism,incentive distribution mechanism and employment mechanism.In this context,this article studies the role of non-state capital in the reform of mixed ownership in the compensation incentive mechanism and corporate governance mechanism.Third,the classification reform of SOEs is an important part of the reform of SOEs in recent years,and the classification research of SOEs has important practical significance.The distinction between competitive SOEs and non-competitive SOEs,and the study of their compensation plans and governance processes respectively,have important practical significance for promoting the classified governance of SOEs. |
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